NuStar Energy L.P. (NYSE:NS) today announced net income applicable to limited partners of $51.8 million, or $1.05 per unit, for the first quarter of 2008, nearly double the $26.7 million, or $0.57 per unit, earned in the first quarter of 2007. The partnership's first quarter 2008 results represent the highest quarterly earnings in the partnership's history.
Included in the first quarter 2008 results in other income is a $4.3 million gain, or $0.08 per unit, for the sale of an idle refined products pipeline; $3.3 million of income, or $0.06 per unit, related to settlement of the business interruption insurance claim for the impact of the fire at Valero Energy's McKee refinery last year; and $1.8 million, or $0.04 per unit, related to a non-cash foreign exchange gain on U.S. dollars held by our Canadian subsidiary. Excluding the impact of these and other items, adjusted earnings for the first quarter of 2008 would have been $43.8 million, or $0.89 per unit, which still represents the highest first quarter earnings in the partnership’s history.
Distributable cash flow available to limited partners for the first quarter of 2008 was $70.3 million, or $1.42 per unit, compared to $47.4 million, or $1.01 per unit, for the first quarter of 2007. Distributable cash flow available to limited partners covers the distribution to the limited partners by 1.44 times for the first quarter of 2008.
With respect to the quarterly distribution to unitholders for the first quarter of 2008, NuStar also announced that its board of directors has declared a distribution of $0.985 per unit, or $3.94 per unit on an annual basis, which will be paid on May 14, 2008, to holders of record as of May 7, 2008.
“2008 is off to a great start with the highest quarterly earnings in the partnership’s history,” said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. “During the quarter, we benefited from increased throughputs on our pipelines and terminals serving Valero Energy’s McKee refinery, higher storage lease and throughput revenues on several of our refined product terminals and a higher contribution from our marketing and trading businesses, which started up in the second quarter of last year. With the remainder of the projects on our $400 million construction program expected to be in service during the year and the recent completion of the CITGO Asphalt Refining Company acquisition, 2008 is shaping up to be an exciting year for NuStar.
“With respect to our recent acquisition of CITGO Asphalt Refining Company, which we closed on March 20 near the end of the first quarter, we continue to expect these assets will be a significant contributor to our distributable cash flow in 2008, particularly in the second and third quarters during the asphalt paving season.
“Our employees have done a terrific job integrating these assets in the short time that we have owned them and I am very pleased with the quality of the assets, the management team and the employees. We are in a great position to build upon the asset base having identified around $35 million of high-return, quick pay-back projects at both the Paulsboro and Savannah refineries that can be implemented in the next six to 24 months. Most of these are projects that focus on allowing greater flexibility to run different crude oil qualities at the refineries. Other projects focus on increasing the energy efficiency of the refineries, increasing the production of the higher quality, higher value polymer modified asphalt and improving the yields and quality of roofing flux and intermediate products. Longer term, we continue to evaluate other projects that focus on the increased flexibility to diminish our exposure to the seasonality of the asphalt business and increase refinery throughput in the off season.
“Looking ahead to the second quarter of 2008, we expect to benefit from the recently acquired asphalt business as asphalt margins should recover from weak first quarter levels. These increasing margins are driven by seasonal asphalt demand ramping up during the second quarter, as well as low inventory levels on the U.S. East Coast compared to last year,” said Anastasio.
A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, April 22, 2008, to discuss the financial and operational results for the first quarter of 2008. Investors interested in listening to the presentation may call 800/622-7620, passcode 42662979. International callers may access the presentation by dialing 706/645-0327, passcode 42662979. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 42662979. A live broadcast of the conference call will also be available on the company’s Web site at www.nustarenergy.com. Further information on the conference call is provided in a management presentation posted to the NuStar Energy L.P. and NuStar GP Holdings, LLC Web sites at www.nustarenergy.com and www.nustargp.com in the Investors portion of the Web sites.
NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 9,063 miles of pipeline, 85 terminal facilities, four crude oil storage tank facilities and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The partnership’s combined system has over 86 million barrels of storage capacity, and includes two asphalt refineries, crude oil and refined product pipelines, refined product terminals, a petroleum and specialty liquids storage and terminaling business, as well as crude oil storage facilities. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the partnership's beliefs as well as assumptions made by and information currently available to the partnership. These statements reflect the partnership's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.'s 2007 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.